FL & FTR
Flag Limits
Price spends more time in consolidation ranges
than moving and trending.
Until recently i would wait 'til price breaks
out of these ranges and i would wait for a retest of the break.
But these ranges are tradeable, so why not
benefit?
A few months back Ifmyante posted an image of a
BEFL and he said price should bounce at this area and he pointed at a DBD
hiccup in the way down.
I said i have noticed a lot of these and asked
what is the name, he said "we don’t have a name for it, just a decision
point".
I told him "i think i found me some new
homework, i'll go find many examples of it and report back."
I guess this is it now.
So here is a short article of what is a
"Flag Limit" since it is widely used lately. It should help avoid
confusion.
As Ifmyante said a while back : "If there's
an area of indecision, it manifests itself as a flag. The limits of this flag
then become the new zones."
He also said that "the Flag Limit
represents the end of the momentum".
All credit goes to him, for bringing it to my
attention.
Below are some graphic representations to
simplify things before we go on real examples.
and some real examples follow
Some of course are more messy than others, the
trick here is to take the best shaped and clear ones.
The whole Flag area has a lot more plays than
the FTB alone.
Its your job, if you like, to take this basic
setup and expand on it.
I don’t list any other plays here because it
will only confuse you for now and miss the basic point.
Discussion will continue in your blogs, if you
have questions post in the school room.
Best of luck to everyone.
by Harry
FTR
1. Introduction
Before solving the puzzle of price action and
before being able to read it successfully, one must discover and understand the
individual pieces the puzzle is made of. After all, every eye-catching building
is made of individual bricks and stones. For most of us at RTM, the beauty of
price action is just as stunning a structure as the cathedral of Chartres or
Sagrada Familia in Barcelona. The only difference is that bricks and stones of
real buildings are represented by price caps, FTRs, engulfs, fakeouts,
quasimodos, diamonds etc. Of the building blocks of the price structure nothing
is more important than engulfs and FTRs!
In my article I am going to explain one of the
two most important pieces of price action – FTR. Together we will explore what
is looks like, where it can be found and what is its role in the structure of
price action.
FTR must be learned properly before one can
advance further. Please take your time, don’t rush; learning price action is an
amazing journey, so enjoy it.
2. What is FTR?
So, what actually is FTR? FTR means ‘Failure to
Return’. But wait… Who wants to return? Where do they want to return? And why
on earth do they fail?
These three important questions must be
answered, so let’s do it.
It’s a well known fact that price, once it
reaches a certain barrier, either bounces of it or breaks it. Once it breaks
it, two possible scenarios occur: it either returns back below/above the
barrier and goes on in the direction against the break or fails to return and
keeps going in the direction of the break. In the latter scenario, a FTR is
made. ALWAYS! And it is of vital importance to be able to identify it!
Why? Well, there is such a strong buying or
selling pressure aka supply / demand at the FTR that the price just cannot
return, it must go on in the direction of the break.
Hint 1:
the selling / buying pressure always remains
at FTR after price has left. Can you see the implication?
Now let’s take a look at the anatomy of FTRs.
In the following picture you can see a diagram
showing some basic variations of FTRs. Look at them carefully, you will see
that they may look a bit different but remember: they are absolutely the same
in terms of the structure.
The red line (a) represents a barrier. It can be
a SUPPORT / RESISTANCE, a FTR in opposite direction (will be explained later)
or limit of a PAZ (Price Action Zone).
Price action breaks the barrier (1) and retraces
(2). It is irrelevant whether price action crosses the barrier again or not (as
in examples (ii and iv above). At the extreme of the retrace a base is very
often made (b).
Then, price action continues in the direction of
the break (3). FTR is confirmed after price action breaks the high / low (c)
which formed after the break of the barrier. Only after the break of (c) we can
say that price action indeed failed to return.
Now, when the FTR is confirmed, we draw a
rectangle at the base (b) and protract it to the right.
Hint 2: for
information how to draw the blue rectangles see the article Caps on Price at
RTM Marketpedia.
Now that we have studied the diagrams above, we
can look at real life examples of FTRs.
3. FTR after the break of SUPPORT / RESISTANCE
FTRs after the break of support / resistance are
very common. They are simply everywhere in the chart and you will learn to spot
them.
You certainly know that there are major support
resistance lines as well as minor ones… the more important the S/R line is, the
more significance we must assign to the FTR that follows.
Major S/R line
Ok, let’s start with the major ones. I assume
that you already know how to distinguish a major SR from minor SR...
In the following chart you can see the brown
RESISTANCE line. The RESISTANCE is a major one, it has been respected many
times in the past (not just those two touches seen in the picture). Suddenly,
the R line is broken. Is it just a fakeout or genuine break? How will we know
it? Yes, right! We will wait for a FTR to be formed.
And voila, a spectacular FTR is made! The price
then rushes away from the R line. Now it’s going to be interesting! Such
FTR is an amazing place to trade on the first visit. The first visit occurred
in approximately one week. And look at the reaction! The first visit to an FTR
is called FTB (First Time Back).
Hint 3: Upon
return to the FTR the price is falling in a free fall, everyone is happily
jumping into trend because “it’s going to go on and on…” but beware, predators
are patiently waiting in FTR level, and so should you…!
For your convenience, there are two more
examples:
Now open your trading platform or Forex
Tester and see for yourself how often this works!
Minor S/R line
It’s important to know that the FTRs in the
above three charts are actually not the only FTRs that can be spotted. Far from
it! Every time price breaks a minor support/resistance, fails to return and
goes on, a new FTR is made!
In real life, however, the chart seldom looks so
neat and clean as in the above diagram. In the following chart you can see the
above principle in a real chart (in a down trend).
Please take your time and study the above chart,
you may notice that I haven’t marked absolutely ALL FTRs because the chart
would be very messy.
Open a chart in your platform and mark all FTRs.
Practise! Mark a swing high/low, find where it was engulfed, then find the FTR.
Repeat with next high/low.
Remember, the purpose of the article is not to
tell you that each and every FTR is tradable but to teach you how to spot FTRs
and how to mark them. Let me repeat: it is of paramount importance!
4. FTR after the break of a FTR in opposite direction
FTRs are formed after engulfing of a barrier. We
already know this. One of such barriers is an FTR in opposite direction. Look
at the diagram below, I think it is self-explanatory.
FTR d is engulfed and FTR 1 is made, and so on.
And a real life example.
Hint 4: FTR 1 is a great confirmation of a reversal. For more
information on this see my journal starting with post 304 on page 13
(sweet FTRs).
5. FTR after the break of a PAZ limit
The limit of a PAZ is another barrier, the
break of which results in extremely important FTRs! This is, however, rather
advanced and it goes beyond the scope of this article on the FTR basics.
6.
Conclusion
In my article I tried to introduce a very
important building block of price structure – FTR. We have learned that FTRs
are formed after the break of a price barrier. It is important to realise that
FTRs are places where institutional traders open / close their positions. This
makes them ideal places for looking for trade setups or targets.
However, it must be stressed that FTRs on their
own are not enough for trading, one must master other important building
blocks,
engulfing being the most
important one.
Les_Paul
FL, FTR - findings/discussions
as IF said "they signify the
end of the momentum" and also we look for them at previous important
areas, like obvious SR line for example.
why? because after the pole, price
tries to get back into the area (Previous area or the pole) and fails, making a
decision and this is our flag limit.
so on first return of the price,
since the decision has already been made, we can expect a reaction.
also, the flag limit area may hold
for more tries than the first visit and is valid till broken (but i dont advise
anyone to trade it a 2nd time)
BREAK: after the flag limit is
engulfed price is free to travel back to the base of the pole
Harry: from the flag i like to trade
the FTB to the FL, and the break of the flag after price returns to it (after
it has filled the pole base).
To trade the engulf of the FL would
require a few things
- that the further FL point is a
reaction to something significant.
- and also that it gives me a clear
place like an FTR or such to base a trade on.
Rules of FL importance by Ped: http://readthemarket.com/index.php/forum/homework-flag-limits/1628-flag-limits?start=200#26049
One of the most important parts of
FL is when it is engulfed. *so that we trade on retrace back from the engulf.
FL supports by Harry: http://readthemarket.com/index.php/forum/homework-flag-limits/1628-flag-limits?start=325#27147
Fakeout Vs Engulf by Ped: http://readthemarket.com/index.php/forum/homework-rooms/1953-engulf-or-a-fakeout#27046
FL vs FTR by Jurij: http://www.readthemarket.com/~readthe3/index.php/forum/journals/2410-jurij-s-corner?start=25#49663
The FTR is a structure that forms only AFTER a break of a level/zone.
The FTR can become a FL when price bounces from it, hence the name (it limits the flag).
The flag limit is just a property of the FTR.
The FTR is a structure that forms only AFTER a break of a level/zone.
The FTR can become a FL when price bounces from it, hence the name (it limits the flag).
The flag limit is just a property of the FTR.
FO, FL FTR, and its Decision Points:
http://www.readthemarket.com/~readthe3/index.php/forum/journals/2282-h-s-trading-journal?start=875#56374
Fake-out by H: http://readthemarket.com/index.php/forum/journals/2282-h-s-trading-journal?start=100#45170
"IF’s trades often occur at levels
where he experiences very little (if any) drawdown. After breaking down some of
those amazing trades I notice many times he is able to predict in advance and
place a PO at the exact area where price turns.
I could be wrong, but it seems like
he knows where the fakeouts will occur by looking left of the engulf to see
what the RBD/ DBR (supply/demand) is reacting to (usually an important FTR) and
determining whether there are any extreme orders left to fill in that FTR. If
so, price will likely FO to a specific decision point within this FTR. That is
why he often drop down to a 5 minute or 1 minute chart to plot his entry….he is
looking for the most accurate decision point."
FL - Order Flow: http://readthemarket.com/index.php/en/forum/journals/2410-jurij-s-corner?start=375#55617
W e just should read the FLs
in terms of Order Flow , Order Flow is the spirit of subjects that has no
difference in TFs.
there is no turning in price without
Free Order Flow . and FLs are the only places that have Free Order Flow . the
target and the place that price came from will tell us where there is Free
Order Flow in the market . try to find when we have deep RT and when we don't
then reading the market is easy as the way that IF do
Deep RT reveals intention: http://readthemarket.com/index.php/en/forum/journals/2410-jurij-s-corner?start=375#55839
There are a lot of highs and lows in
the chart so there will be a lot of FTRs in the chart.But just a few of them
are important and can reverse the price ! that's why we are looking for FLs.
FLs=FTRs but FTRs aren't always= FLs
FLAGS: Flags usualy consume things,
price hits something and instead of instantly reversing it starts chopping it
away (consumes the orders) to continue. some flags will also have compression
in them. this is why when they consume what they hit, price slides easy via the
compressed back of the flag to continue its move.
some RED on that www.forexfactory.
com/showthread.php?p=4183533#post4183533
pretty much every candle with a wick
or tail has a flag in this place. the question is did this flag
consume/break/retest something?
in less words, is it important and
why?
H: Every Flag that forms must have
have two flag limits. Those flag limits are formed when an engulf happens and
an FTR is formed. The FTR's that are formed are decision points and areas of
true supply/demand (where price often fakes out to gather orders for
liquidity). The flag contains all the PA that exists within the flag limits.
The Flag is the PAZ - the portion below and above the flag/PAZ are the flag
limits which "box in" the area where price bounces around until it
has the ability to engulf one of the two flag limits. These flag limits
represent the furthest (most extreme) set of orders remaining. This is true
supply/demand (within the context of the Flag it's currently in), and this is
where the MPL's are located.
some targets have magnetic repulsion
at first bcz they are powerful but then they act as magnetic attraction . and
some targets are weaker than others so they don't need big RT to absorb some
more orders and these type of target have magnetic attraction at first so they
don't let price to make a big RT.
1- The most important FLs are those
that are created after engulfing an opposite FL.
2- The last FL in a rally (b4 RBD is
established) is the most important one... the last FL in a drop (b4 DBR is
established) is the most important one.
3- The first FL coming out of a new
zone i.e. RBD/DBR that takes out another opposite FL (2-) or an important swing
high/low (that gave the lowest low/highest high) has great value.
4- Sometime FL cannot be well seen
defined as per breaking an important SR or another opposite FL, but often we
can tell of their existence by looking at where price held several times in a
row.
5- Flipped FLs are important as they
may at times of non visibility of the new ones define the new zone for us.
6- The best trades to be taken are
the FTBs to FLs.
7- Price will often FO in the zone
between the the first FL that come out of a RBD/DBR and the RBD/DBR itself.
8- A FL may have other FLs inside
it, an important one would be an opposite one that got faked out, then flipped.
9- The decision to break out of an
FL is often tradable.
10- A FL is a RBR/DBD and often
defined as one candle - the whole range of that candle.
I will also add what seniors say
here often and that is FL indicate the end of momentum.
1. Find a fakeout
2. Find the decision point to Fake
out
3. Wait for price to engulf this DP
4. The FL that forms after the
engulf of the DP to Fake out has substantial OF and will likely be a good place
to trade when price returns on its FTB.
FL Target Atraction vs Repulsion: http://readthemarket.com/index.php/en/forum/journals/2282-h-s-trading-journal?start=900#56379
Eventually, reading through threads,
you'll find the formula FL = FTR. So yes, not only FL can be FTR, they are the
same. The difference, to me, is scale. On daily chart you might see FL, but
then you zoom in, and you'll see FTR. Still same principle, price breaks
something, does some PA and then keeps going. FTR comes from the belief that
market players always go back to every flag that has never been visited to collect
the orders eventually for whatever reason. So any flag that have not been
touched yet is a FTR
To sum it up, FTR is simply price
Failing to Return to its old Price Action Zone after price Engulf the Limit of
the Zone which is denoted by Flag Limits. So naturally the FTR is a decision point
that indicates that price is either too expensive or too cheap in that old
Price Action Zone hence it must move in the direction of the Engulf ( the
hidden signal ), in search for its value. Now in that FTR decision point there
are always clusters of unfilled orders left, so when price returns to that FTR
and the approach/pressure is not strong then that place is an excellent place
to take a position at that FTB.
at first we look for the FTR(after
the breakout of some barrier ) this FTR means that price is failure to return
to MAKE NEW L/H .yes this is the point ,after this price should go in the
direction of ENGULF in this case should rally and make new HH .If the price
fails make a new HH in the direction of ENGULF then it's not FTR .
After forming the FTR we look for
FIRST TIME BACK to that FTR . bcz most of the time there are alot of unfilled
orders there .and most of the time the FTB make a FO for us below the FTR(base
of flag). :-D :-D
in the topic ENGULF i will try to
write HOW i my self treat with ENG and FO .
SO THAT we can have a nice trade in
FTB(first time back to FTR)
but what about the first
decision(before breaking out the barrier ) :
in that DBR that some decision made
to break prior H or for example to enter to the prior CP we have a DP .
and also we have a FAILURE TO RETURN
TO THAT DP
and also i trade the FIRST TIME BACK
to those DPs.
Multi-layered FL-FTR combo:
we need look left to find a RBR,DBD
that a supply reacted to , we look for tricks to be play in the places that
tricks have been played i past , those places are FLs , they are the start of
new transaction of orders , we need to look left to find if the extreme of
those orders taken out or not , if not then we have FO, if yes then we don't
trade in those FLs and we look for opp in our S/D .
in the whole always trade FLs not
S/D , bcz S/D are a reaction to FL. :-)
(Harry) Trick: Flag limit engulfed,
polebase is not filled, but rather, price runs away after engulfing into
polebase. Look at a revenge engulf of the DP,EngFL. the revenge Eng is
continuation for direction of the Eng-ed FL.
comprehensive analysis from H to H4
to H1
(FXYogi) FL must be an FTR.When a FL is engulfed and makes an FTR it
will become another FL and limit the Flag to the south or north. But not every
FTR is a FL.
People
still holding to SR flip and decision points ,supply became demand that sort of
stuffs.
(FXYogi) If high or low breaks and failed to return, its an FTR. But
if an important high or low breaks and fails to return, its an FL,
if a FL is engulfed and failed to return its a FL too. If you define FTR is and
important high or low engulfed and failed to return , then both will be same .We can put it this way, FTR is a cause (it fails to
return). FL is the effect (it limits the flag).
(FXYogi) Just an hint for you from my experience for trading from
the "edges". Once the price enter into the zone, we SHOULDNOT enter
directly. This should be kept in mind always. We need to wait until price
retrace to its deepest till it meet the "extreme". Now finding this
deepest points is the "key" to this method. That where everything
starts and ends. One
more thing every FTR are not FL(I said it before but i never explained
it).Otherwise all chart will be filled with FL and PAZ. . FL will become
special when its formed after engulfing "another FL to the left ''
My
answer is Pole is not necessarily a momentum candle. And its not liquidity gap
too.
Pole, FL and Flag
(bulleyes) It's my understanding that a FL is a FTR but a FTR is not
necessarily a FL. In the chart below, it seems I can mark out 4 FTR/FLs. Is
this correct or I'm seriously wrong about something here?
(DasIstGut) The difference between FL and FTR is that in case of FTR
price trying to return a little harder, creating a hill, but fails. In case of
FL, all price can do is stall for a bit, and give up. Also note, that FL/FTR is
just a visual concept to make is easier, both of them are just DP. Oh, and they
are also TF dependant. What is a FTR on one TF, can appear as FL on a higher
one. So don't think too much about it
You
can try to buy at every one of them, and it might even work out, but only for a
while.
There are many other factors to consider. Which of them are important, and which are not? The reason why price reversed on your FTR 1 is because it was the source of a huge spike up, taking out previous high, and probably some more to the left.
Meaning the disbalance in that area was high enough to create a move taking all the opposing order layers.
So there is a high chance this FTR will hold and price is reversed on FTB.
But you can also notice 2 violent moves down on approach to FTR 1. 1st one is actually a rejection showing that FTR 1 is strong. But the bears are not giving up and the second wave of selling peirces through the whole area, putting this zone under threat.
So when price gets back to this level in the future it's worth looking into the force behind the move. The chance it is going to hold another LQ push are diminished. But only if price doesn't engulf marked HI on your chart. Depending on what is on the left, if engulf is a true one, FTR 1 area is a nice place to gather forces for the push higher for the bulls
There are many other factors to consider. Which of them are important, and which are not? The reason why price reversed on your FTR 1 is because it was the source of a huge spike up, taking out previous high, and probably some more to the left.
Meaning the disbalance in that area was high enough to create a move taking all the opposing order layers.
So there is a high chance this FTR will hold and price is reversed on FTB.
But you can also notice 2 violent moves down on approach to FTR 1. 1st one is actually a rejection showing that FTR 1 is strong. But the bears are not giving up and the second wave of selling peirces through the whole area, putting this zone under threat.
So when price gets back to this level in the future it's worth looking into the force behind the move. The chance it is going to hold another LQ push are diminished. But only if price doesn't engulf marked HI on your chart. Depending on what is on the left, if engulf is a true one, FTR 1 area is a nice place to gather forces for the push higher for the bulls
(bulleyes) Hi, thanks so much for sharing your thoughts. Both FTR and
FL are just DP, that's really a an eye opening reminder to me. As you said it's
better that we trade at the important FTR/FLs. So I think we should trade at
extremes and important breakouts. Considering that, I think it's better to
trade FTR/FL 1 and FTR/FL 4 in the chart. And I think the stop loss for FTR 1
and 4 should be put below previous low in case there is an engulfing of the
FTR. Please let me know if you disagree
(Charvo) it's been more than half a year since i started following
IF's footsteps. it has been many round trips between 'nice/oh i c/awesome/' and
'wtf/dunno/weird'.
but now i have only one question, please help, anyone please share your thoughts? isn't it true that the price movements consist of only 2 things: pole and flag, and flag limit is just the edge of a flag (two edges of a flag)?
but now i have only one question, please help, anyone please share your thoughts? isn't it true that the price movements consist of only 2 things: pole and flag, and flag limit is just the edge of a flag (two edges of a flag)?
http://www.forexfactory.com/showthread.php?p=7576992#post7576992
(polymorphfx) If you look in the Marketpedia section of RTM, the article is called: Flag Limits - DBD/RBR. So FL are the B's (bases) of DBDs and RBRs. See the article Caps on Price - RBD/DBR where the B's of RBDs and DBRs are Caps.
I tend to think of a pole and flag in the real, non-trading world. A pole rises from the ground and has a flag on top. The bottom of the flag is part way up the pole and the top of the flag is, of course, at the top of pole. On a chart let's say that a pole rises from demand. Price pauses as it breaks something to the left before it continues upward. That pause is your FL (or FTR.) The top of the continuation upward is the cap (which is often supply.) Just the opposite in a down move.
The lingo can be confusing sometimes but hopefully that helps. Another great resource is If's video on decisions. The general sentiment seems to be, "who cares what it's called? It's a decision on price." I'm not trying to speak for him or oversimplify but watch the video and see if you get the same impression
(polymorphfx) If you look in the Marketpedia section of RTM, the article is called: Flag Limits - DBD/RBR. So FL are the B's (bases) of DBDs and RBRs. See the article Caps on Price - RBD/DBR where the B's of RBDs and DBRs are Caps.
I tend to think of a pole and flag in the real, non-trading world. A pole rises from the ground and has a flag on top. The bottom of the flag is part way up the pole and the top of the flag is, of course, at the top of pole. On a chart let's say that a pole rises from demand. Price pauses as it breaks something to the left before it continues upward. That pause is your FL (or FTR.) The top of the continuation upward is the cap (which is often supply.) Just the opposite in a down move.
The lingo can be confusing sometimes but hopefully that helps. Another great resource is If's video on decisions. The general sentiment seems to be, "who cares what it's called? It's a decision on price." I'm not trying to speak for him or oversimplify but watch the video and see if you get the same impression
flag limit is the
edge of a flag, your FL is not. why do you think it is?
edited: per Hoodlum, i
think i'd better rephrase it in a better way, the FL you marked is NOT a FL, it
is a FTR. and why market cannot
cross a FL (even if your FL is correct)? btw, hoodlum, "FL is a cluster of orders" is sort of
strange, i can't say it is wrong, but i'd say FL 'show' where orders are
1. Here's the pole, big buying
2. Price flags on the way up - we should look for a long entry on the FTB to this
3. Price makes a more local flag, here - likewise, could be a long on the return. Price creates a high from here.
4. Here we have the FTB to the local flag - long opportunity
5. The target for the long is back up into the previous high. Now we don't know what's going to happen. Price could break the previous highs, or it may drop to break the lows created by 3. We don't know, we have to wait (on this time frame, anyway).
6. Price returns to the flag, but we don't get a signal to do anything - we trade from the edges of flags/ranges, not the middle.
7. Oh, come on! I'm getting bored, now... Ok, arguably we broke the high at 5, but not the high before that. Was that a fakeout on a lower time frame, into the high before 5? I dunno, but it looks like it might have been.
8. OK, so now we know it was a fakeout, as the IT selling has now engulfed the flag at 3, and is now also the FTB to the flag at 2. Wow. So, we take a long here, targeting the high at 7.
9. The ITs are protecting their position at 7 (where they made the fakeout) and sell right through the flags at 2 and 3, and the low at 8. That's a strong engulf, and now 9 becomes a pretty good FTR.
10. Price flags just under the engulfed area, as it decides what to do next
11. Price breaks down, but does not reach the base of the pole (Aaron
) and so we should look for a short on the FTB to the flag at 10.12. here's the FTB to that flag.
13. Our target for the short is the low made at 11
14. Errr, it's usually 13 that's missing from airliner rows, etc. Oops.
15. Price has cut right through the supply at 10, and has become demand - we should look to take a long at the top of the zone created by 10.
16. The target for that long is the superb FTR created at 9. We also look to take a short at 16, aiming for the base of the pole.
17. We need to be careful (maybe take some profit) as price returns down to the demand at the 15 flag. In this case it cuts right through. It might even give chance for another short from the underside of the flag
18. The engulf of 2 and 10 by the move to 11 gives us the confidence to aim for 18 as the ultimate target.
If I can ever do this (or 50% of it) in reality, I'll be the happiest guy on this site (or any other).
(Harry)
nice diagram above rcmacf
very good work and sum up of quite a few things. most important where your next immediate target is. that should remind everyone who wants to swing everything to the stars or to zero and beyond, that without the next base breaking you dont go anywhere.
(dcabfx)
Some questions when considering oppurtunities on the FL play:
Why do some FTB trades at FL's work and others don't?
Where in the FLAG ZONE should we enter?
What happen's when a FL is engulfed?
Where to enter in a FLAG?
Look for a decision within its limits where price broke the extreme. Sometimes this is easy to spot moving lower in TFs. Look for fresh S/D within the FL zone.
What happens when a FL is engulfed?
Engulfed FL is a good sign Price wants to fill the base of the FL pole. This is something I like to use as criteria for an FTR trade setup.
Why do some FTB trades at FL's work and others don't?
A FLAG should break a key level/area to be considered significant. When a bases pole has momentum coming out of a significant price level, SD Zone, SR Flip, etc, and the FL engulfs a key level/area (SR, SD, FL), this is criteria that is important when considering entering on RT to the FL area.
**When polebase Origin is from significant level/zone, RT to FL is good.
https://readthemarket.com/index.php/en/forum/journals/2126-robbie-s-journal-observations?start=175#43419
(rcmacf)
https://readthemarket.com/index.php/en/forum/homework-flag-limits/1628-flag-limits?start=825#44210
(Keyador)Regarding the question about the FTB and target. You can blindly take the trade when price returns, but I prefer not to. I wait for a engulf so I can be sure that the zone holds.
The target of your FTB trade depends ill try to draw it:
https://readthemarket.com/index.php/en/forum/homework-flag-limits/1628-flag-limits?start=975#54527
(Salivan)
https://readthemarket.com/index.php/en/forum/journals/2567-fight-club?start=50#54579
(Sali)
and
again the reason is clear you can prove it in terms of OF for your self
. when the transaction of orders executed then balance in base of a
Flag create and this balance still valid till an other imbalance start
and ENG prior balance so that now we need an opposite transaction of OF
to be execute.
in
point 1 we have a QM LVL with out reaction to it and broken at 5 and
price flaged . point 2 is the extreme edge of the FTR ,that's right
price didn't ENG the extreme and last pockets of SUPPLY reacted well in
point 6.
but which one is important ???
the FL after engulfing prior DEMAND and the source of breaking FLIP ZONE OR the FTR ?
what happened in point 3 :
in point 3 price didn't break prior demand and failed to return to the up side and came down and the demand broken (also FLIP ZONE)
IN POINT 4 :
in my idea point 4 was the source of ENG of prior DEMAND and it engulfed in point 6
so that i consider that spike in point 6 ENG .
but which one is important ???
the FL after engulfing prior DEMAND and the source of breaking FLIP ZONE OR the FTR ?
what happened in point 3 :
in point 3 price didn't break prior demand and failed to return to the up side and came down and the demand broken (also FLIP ZONE)
IN POINT 4 :
in my idea point 4 was the source of ENG of prior DEMAND and it engulfed in point 6
so that i consider that spike in point 6 ENG .
https://readthemarket.com/index.php/en/forum/journals/2517-the-art-of-war?start=425#54106
(Sali) in the case of confirmation , i can say always we have confirmation in HTF and interest area in LTF to enter . there is always one FL in HTF that ENGULFED and one FO in LTF to dive. so that TT is also a kind of trade with confirmation .in the whole i suggest you to start with this quote from IF , this will help you a lot to know where the orders are
https://readthemarket.com/index.php/en/forum/journals/2517-the-art-of-war?start=450#54145
https://readthemarket.com/index.php/en/forum/journals/2517-the-art-of-war?start=475#54378
1. The leading IT engulfed price back up into the range (engulfed V), showing he was taking price up to the last FL above (U)
2. The other ITs, who had been short from high above, saw that price had turned, and wanted out of their shorts and into long positions.
So they sold against the retail breakout long trades
They will have Faked Out below a ltf demand (not visible in this tf), scaring the BO buyers into selling at a loss, and enticing BO sellers, giving them lots to buy
against and go net long.
3. A marker was set for future use
4. They turned price before the target, creating a supply which could be broken later
5. Price had been dropping for some time, attracting lots of retail sellers; the IT's were eating these up bit by bit. It was obvious to the more savvy of the retailers that price was heading for W. So the natural thing to do was turn price before the tg, creating a demand to be faked later. They buy heavily, taking all the herd's sells and shooting price back up.
6. They removed their pending orders at 4, allowing price to break supply. All the short retailers freak out and start closing by buying. This allows the ITs to sell to them, beginning the process of going from long to short.
7. They begin to flag price downwards, adding little shorts as they create LLs and LHs. This of course means a downtrend to the retailers, so the retailers begin selling too
8. The Its want to be the only sellers, so they buy heavy into Supply (U) shaking out the retail sellers and enticing BO buyers, all giving them more to sell to
The retailers are getting frustrated by now. In the chop, there are lots of losers buying and selling all over the place, taking revenge trade after revenge trade. With prices still making HHs and HLs though, very many are still buying
Savvy SD retailers, however, are selling at 8, putting their stops above (U) (poor beggars!). As price rises through supply, these SD retailers are adding to their shorts, delighted to get even better prices, and the ITs are happy to let them do so, because at
9. The ITs have either once again removed their pending short orders in Supply, or have used them to tentatively buy against. By adding different sizes of orders, they can now feel, by how price reacts to their orders, who's in the market with them. They feel when the selling pressure has dropped, and take this opportunity to buy just enough to break the supply.
This hits the savvy SD retailers' stops and entices tons of BO buys, giving them masses of buyers for the sells they're ready to make. They're now heavily short.
10. They take some profit, creating a demand to be broken later
11. It's important that they bewilder every retailer out there; tire them out completely so they have no idea what they're doing. So they retrace price back up, breaking LTF supplies as they go, attracting more buyers. Price hasn't engulfed anything south yet, so the once savvy SD retailers are buying too, trying to reclaim their losses. The ITs are selling to them in bits, until they feel the buyers have dwindled enough for them to put in their next set of big shorts, breaking 10 at 12.
They buyers stops have hit, and the remaining BO sellers are getting in, giving the ITs a breather. They're heavily short, and happy.
13. We're at the SR of 4. ITs take a little profit, bouncing price up a bit, breaking a LTF supply. This gets the retail sellers out, offering more buys for the IT to sell to
14. It's the same story as 6 and 9
15. The FO to the Demand of the FL. It would be remiss of any IT not to take full advantage of all the shorts on offer here, and cause some midrange mayhem!
16. The engulf - time to flag
17. Create Supply before tg to be broken later
18. Inverse of 17
19. Chop for some confusion now and levels to be broken later
20. Sell to the BO buyers and SD sellers' stops
21. Lots more easy BO and stop orders to be snatched up. This is real fun for the ITs, and is having little effect on their overall position size in the big picture, until they want it to!
22. Catches lots more of the usual losers and fills the range
BUT we always need to know the full story of price.
If C was a break of an even more important zone, the break of B may easily have simply been the obligatory FO
(Harry) https://readthemarket.com/index.php/en/forum/homework-flag-limits/1628-flag-limits?start=75#20970
how to find FLs? just train your eyes, mark SR and keep following price as it creates them. then look for return.
if i can suggest, look for bear ones separately and then bull ones.
(ttfreitas) https://readthemarket.com/index.php/en/forum/homework-flag-limits/1628-flag-limits?start=75#21008
I guess if I had to give away a tip to finding a flag it would be to look for a formation with a solid support/resistance.
A 'tip' that I find more helpful in regards to price action in general, though, would be: "If PA is not clear, sticking out clear, stay the hell out of it."
That goes for any price formation, FTRs, flags, etc.
In the example you gave, the flag is not clear to me so I will not trade it.
(Harry) https://readthemarket.com/index.php/en/forum/homework-flag-limits/1628-flag-limits?start=75#21024
hello H, i agree with ttfreitas, we shouldnt bang much about on a flag that aint worth banging. we better look for clear examples rather than trying to curve fit it.
about your questions above.
1) does the FL have to be tested to make it the FL?
no it doesnt, your first test of it would be the FTB (that you want to trade).
2) Along the way there are many RBR's. Any one of those could be the FL. So to tell which one will be the FL do you look to see which one sits above past resistance?
i wouldnt use any other rule that pick the one that better fits the eye, as you said the best will be those that brake past resistance
https://readthemarket.com/index.php/en/forum/homework-flag-limits/1628-flag-limits?start=75#21026
(Harry) yes, momentum creates the pole, price breaks past SR, creates that hickup (the flag limit) and starts consolidating creating the flag area. then we like to trade the first retest as you said.
all that is its an imbalance of orders we can exploit on first return.
FL HELD PRICE
(Sali) in the case of confirmation , i can say always we have confirmation in HTF and interest area in LTF to enter . there is always one FL in HTF that ENGULFED and one FO in LTF to dive. so that TT is also a kind of trade with confirmation .in the whole i suggest you to start with this quote from IF , this will help you a lot to know where the orders are
https://readthemarket.com/index.php/en/forum/journals/2517-the-art-of-war?start=475#54378
1. The leading IT engulfed price back up into the range (engulfed V), showing he was taking price up to the last FL above (U)
2. The other ITs, who had been short from high above, saw that price had turned, and wanted out of their shorts and into long positions.
So they sold against the retail breakout long trades
They will have Faked Out below a ltf demand (not visible in this tf), scaring the BO buyers into selling at a loss, and enticing BO sellers, giving them lots to buy
against and go net long.
3. A marker was set for future use
4. They turned price before the target, creating a supply which could be broken later
5. Price had been dropping for some time, attracting lots of retail sellers; the IT's were eating these up bit by bit. It was obvious to the more savvy of the retailers that price was heading for W. So the natural thing to do was turn price before the tg, creating a demand to be faked later. They buy heavily, taking all the herd's sells and shooting price back up.
6. They removed their pending orders at 4, allowing price to break supply. All the short retailers freak out and start closing by buying. This allows the ITs to sell to them, beginning the process of going from long to short.
7. They begin to flag price downwards, adding little shorts as they create LLs and LHs. This of course means a downtrend to the retailers, so the retailers begin selling too
8. The Its want to be the only sellers, so they buy heavy into Supply (U) shaking out the retail sellers and enticing BO buyers, all giving them more to sell to
The retailers are getting frustrated by now. In the chop, there are lots of losers buying and selling all over the place, taking revenge trade after revenge trade. With prices still making HHs and HLs though, very many are still buying
Savvy SD retailers, however, are selling at 8, putting their stops above (U) (poor beggars!). As price rises through supply, these SD retailers are adding to their shorts, delighted to get even better prices, and the ITs are happy to let them do so, because at
9. The ITs have either once again removed their pending short orders in Supply, or have used them to tentatively buy against. By adding different sizes of orders, they can now feel, by how price reacts to their orders, who's in the market with them. They feel when the selling pressure has dropped, and take this opportunity to buy just enough to break the supply.
This hits the savvy SD retailers' stops and entices tons of BO buys, giving them masses of buyers for the sells they're ready to make. They're now heavily short.
10. They take some profit, creating a demand to be broken later
11. It's important that they bewilder every retailer out there; tire them out completely so they have no idea what they're doing. So they retrace price back up, breaking LTF supplies as they go, attracting more buyers. Price hasn't engulfed anything south yet, so the once savvy SD retailers are buying too, trying to reclaim their losses. The ITs are selling to them in bits, until they feel the buyers have dwindled enough for them to put in their next set of big shorts, breaking 10 at 12.
They buyers stops have hit, and the remaining BO sellers are getting in, giving the ITs a breather. They're heavily short, and happy.
13. We're at the SR of 4. ITs take a little profit, bouncing price up a bit, breaking a LTF supply. This gets the retail sellers out, offering more buys for the IT to sell to
14. It's the same story as 6 and 9
15. The FO to the Demand of the FL. It would be remiss of any IT not to take full advantage of all the shorts on offer here, and cause some midrange mayhem!
16. The engulf - time to flag
17. Create Supply before tg to be broken later
18. Inverse of 17
19. Chop for some confusion now and levels to be broken later
20. Sell to the BO buyers and SD sellers' stops
21. Lots more easy BO and stop orders to be snatched up. This is real fun for the ITs, and is having little effect on their overall position size in the big picture, until they want it to!
22. Catches lots more of the usual losers and fills the range
BUT we always need to know the full story of price.
If C was a break of an even more important zone, the break of B may easily have simply been the obligatory FO
(Harry) https://readthemarket.com/index.php/en/forum/homework-flag-limits/1628-flag-limits?start=75#20970
how to find FLs? just train your eyes, mark SR and keep following price as it creates them. then look for return.
if i can suggest, look for bear ones separately and then bull ones.
(ttfreitas) https://readthemarket.com/index.php/en/forum/homework-flag-limits/1628-flag-limits?start=75#21008
I guess if I had to give away a tip to finding a flag it would be to look for a formation with a solid support/resistance.
A 'tip' that I find more helpful in regards to price action in general, though, would be: "If PA is not clear, sticking out clear, stay the hell out of it."
That goes for any price formation, FTRs, flags, etc.
In the example you gave, the flag is not clear to me so I will not trade it.
(Harry) https://readthemarket.com/index.php/en/forum/homework-flag-limits/1628-flag-limits?start=75#21024
hello H, i agree with ttfreitas, we shouldnt bang much about on a flag that aint worth banging. we better look for clear examples rather than trying to curve fit it.
about your questions above.
1) does the FL have to be tested to make it the FL?
no it doesnt, your first test of it would be the FTB (that you want to trade).
2) Along the way there are many RBR's. Any one of those could be the FL. So to tell which one will be the FL do you look to see which one sits above past resistance?
i wouldnt use any other rule that pick the one that better fits the eye, as you said the best will be those that brake past resistance
https://readthemarket.com/index.php/en/forum/homework-flag-limits/1628-flag-limits?start=75#21026
(Harry) yes, momentum creates the pole, price breaks past SR, creates that hickup (the flag limit) and starts consolidating creating the flag area. then we like to trade the first retest as you said.
all that is its an imbalance of orders we can exploit on first return.
https://readthemarket.com/index.php/en/forum/classroom-and-trading-room/1517-the-classroom?start=450#18044
A FL is where a PAZ gets broken and price FTRs
This is a perfect example of it
A FL is where a PAZ gets broken and price FTRs
This is a perfect example of it
https://readthemarket.com/index.php/en/forum/journals/1523-if?start=2350#60927
a FL limit can only be drawn after the TG has been hit
https://readthemarket.com/index.php/en/forum/journals/1523-if?start=2350#60938
Lupy wrote: ...basically it contains the IT decision for the entire flag above or bellow it. The picture gets a little "hairy" when we add the concept of scales - because a FL becomes a FL when it touches the next FL in the same scale ....else it's just a flag that keeps expanding....and inside Larger scale FL's we have smaller scale FL's that act as targets and traps for smaller moves and positions.
a FL limit can only be drawn after the TG has been hit
https://readthemarket.com/index.php/en/forum/journals/1523-if?start=2350#60938
Lupy wrote: ...basically it contains the IT decision for the entire flag above or bellow it. The picture gets a little "hairy" when we add the concept of scales - because a FL becomes a FL when it touches the next FL in the same scale ....else it's just a flag that keeps expanding....and inside Larger scale FL's we have smaller scale FL's that act as targets and traps for smaller moves and positions.
E:1.
If we do not hit the target and we rely on the FTR I drew as a level or
its MPL, there is eevery chance the FTR may make a larger kink before
hitting the target. and retrace further past what we thought was the FTR
This will become more evident once the course has been uploaded.
2. What are TGs. Exactly the same as the entry areas we look at for PA. So they can be: kinks (FLs) of Highs/Lows, Pre CP, kinks after CP and Left Shoulders. We need to be conservative and mark any of these as a TG. BUT we for our entries we should only use the best. Like a FL kink that lines up with a left shoulder and Hi/Low kink or with a CP zone etc. I will illustrate in a few hours
2. What are TGs. Exactly the same as the entry areas we look at for PA. So they can be: kinks (FLs) of Highs/Lows, Pre CP, kinks after CP and Left Shoulders. We need to be conservative and mark any of these as a TG. BUT we for our entries we should only use the best. Like a FL kink that lines up with a left shoulder and Hi/Low kink or with a CP zone etc. I will illustrate in a few hours
https://readthemarket.com/index.php/en/forum/journals/1523-if?start=2375#60940
We cannot draw a FL until the UFL has been hit.
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